TOKYO, Jan 7 Asian shares fell to a near
four-month low on Tuesday, though the dollar rebounded after
overnight weakness on disappointing U.S. services sector data
that raised concerns about stuttering growth in the world's
largest economy.

Japan's Nikkei index shed 0.6 percent, adding to a
2.4 percent slide on Monday, its first trading day of 2014.

U.S. stocks slipped on Monday after a mixed batch of
economic reports, resulting in the Standard & Poor's 500
losing in the first three trading sessions of 2014 after ramping
up 30 percent last year.

S&P 500 E-mini futures gained 0.2 percent in Asian
trade on Tuesday, indicating a firmer open on Wall Street later
in the day, however.

Financial bookmakers also expected UK, German and French
equities to open steady to modestly higher on Tuesday.

Data from the Institute for Supply Management showed the
pace of growth in the U.S. services sector slowed for a second
straight month in December with business activity expanding at a
slower rate and new orders contracting.

A separate report from financial information firm Markit
said its services sector purchasing managers index eased
slightly in December from the prior month, but data from the
U.S. Commerce Department showed new orders for factory goods
rebounded in November, as expected.

All eyes in the market will be on Friday's nonfarm payrolls
data, which will provide new clues on how well the U.S. economy
is recovering and how fast the Federal Reserve might unwind its
stimulus programme, which it began to taper last month, and how
long it will keep its interest rates low.

"No more than 20 percent of investors think that there is a
serious chance that the Fed will hike before the middle of
2015," Steven Englander, global head of G10 FX strategy at
Citigroup, wrote in a note.

"A nonfarm payroll print of 250,000 or more would raise
alarm among investors that the recovery was getting out of hand
and that the Fed would be behind the curve."

He said commodity and emerging currencies would be sold off
in such a scenario, while the euro and the Swiss franc could be
a safe haven.

The Indonesian rupiah lost 0.7 percent to 12,255 per
dollar, edging closer to a five-year trough of 12,278 set on
Dec. 27.

KEEP CALM AND CARRY ON

Against a basket of major currencies, the dollar
added 0.1 percent, recouping some of the softness after the U.S.
services data.

"We expect to see good interest to buy USD on dips heading
into the jobs release," analysts at BNP Paribas wrote in a note.

The euro was a tad softer at $1.36215, having come
off a four-week low of $1.35715 set in the previous session,
while the greenback was up 0.3 percent at 104.53 yen,
covering some of Monday's 0.6 percent decline.

According to data from the Commodity Futures Trading
Commission, currency speculators pared bets in favour of the
dollar in the week ended Dec. 31 to the lowest in about six
weeks.

Before Friday's jobs report, investors will focus on the
minutes of the Fed's December policy meeting, due out on Jan 8,
and the European Central Bank's policy gathering on Thursday.

Late on Monday, the U.S. Senate confirmed Janet Yellen, a
key force behind the Fed's unprecedented and controversial
efforts to boost the U.S. economy, as the next Fed chair to
succeed Ben Bernanke, whose second four-year term expires on
Jan. 31.

Among commodities, U.S. crude futures put on 0.2
percent to $93.62 a barrel after having fallen 0.6 percent
overnight to a one-month low.

Gold advanced 0.4 percent to $1,242.04 an ounce,
heading for a sixth straight day of gains and sitting not far
from a three-week high of $1,248.30 set on Monday.

"We have been rather surprised by gold's resilience over the
course of the last week, but suspect that it's upside staying
power will be limited," INTL FCStone analyst Edward Meir said.

Next In Market News

WASHINGTON, Dec 9 The U.S. Senate passed
legislation on Friday to fund the government through April and
sent it to President Barack Obama for signing into law, after
Democrats who sought more generous healthcare benefits for coal
miners stopped delaying action on the measure.

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